The Plaintiff entered into litigation agreements with the Defendant, H&M Combustion Services Ltd., relating to an oil spill. In the 2011 agreement, H&M agreed to defend the action and commence a third party claim, which the Plaintiff would fund. In the 2016 agreement, H&M assigned all of its interest in the lawsuit to the Plaintiff, who indemnified H&M from any exposure in the litigation. Neither party disclosed these agreements to the other parties immediately upon their execution. Upon their disclosure, another Defendant moved to stay the action on the basis that there was a failure to comply with the requirement of immediate disclosure. The motion judge held that the agreements should have been disclosed, but refused to stay the action on the basis that there was no prejudice. On appeal, the decision was overturned by the Ontario Court of Appeal on the basis that the failure to disclose the agreements resulted in a mandatory stay of the claim of the non-disclosing party.
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